Arizona property taxes are paid in arrears!
Arizona property taxes are paid in arrears 🏠💸
One of the things that are really confusing when you're buying a new construction home is how the property taxes work especially in Arizona because property taxes are paid in arrears. So, here's what happens, you have a new home built and the county assessor has not yet assessed the value of that property with the structure on it so the only taxes that they're actually charging initially is on the raw land but lenders they look at that and they say okay we know the property taxes on this $500,000 house aren't really only going to be $400 a year right that's just the raw land. So oftentimes, they will say "hey we want you to put into escrow one maybe 1.25% of the purchase price." So if you're buying a $500,000 house, they're gonna predict the property taxes at maybe 1% or 1.25%. So they're gonna base your payment based on that they're gonna have you start putting $5,000 a year into your escrow account but the reality in Arizona, most of the time the assessed value is going to be less than one percent plus it's going to take the county assessor a year and a half two years before they actually get the property assessed and start charging the taxes with the improvements. So even though you're going to have to be making this payment into your escrow account you're likely going to end up with a big refund after the first year of payments because they're charging you 1% but then when the tax bill comes in from the county assessor and it's only $400 off of the raw land, you're going to get a huge refund check but eventually, the county assessor is going to catch up. They're going to start charging the appropriate amount of taxes and your mortgage payment will be adjusted once your loan servicer figures out what the actual property taxes are going to be.
What does this mean to you? If you're even a little bit interested in learning more about participating in the Phoenix housing market as a seller, buyer, or investor... you NEED to know this stuff! Or at least work with someone who is obsessed with the market stats. Reach out to me today so we can start working on making your real estate dreams a reality!